December 13, 2017

Demand an Important Ingredient of Price Rally

Good Morning! From Allendale, Inc. with the early morning commentary for November 3, 2017.

Grain market traders begin to assess estimates for next week's USDA report after a good showing in export sales yesterday. Outside markets will have their eye on this morning's jobs data as equities look to add to their gains following yesterday's record close in the Dow.

 

Average estimates for next week's USDA Supply and Demand report should be released later today or early Monday. For Allendale's submission to newswires, we used corn planted acres of 90.862 million, harvested acres of 83.119, and a yield of 172.41. For soybeans, we see planted acres of 90.207 million, harvest at 89.471, with a yield of 49.19. With these numbers, we see 2017/18 corn ending stocks of 2366 million bushels, and soybeans at 417 mb.

Weekly export sales for the week of Friday October 20 to Thursday October 26. had corn sales of  901,417 metric tonnes, within the 800,000 – 1,200,000 trade expectation. Of that 811,417 was the current 2017/18 crop year. USDA’s corn export goal is 1.850 billion bushels, 6.2% over the five year average.

Soybean sales totaled 1,982,128 metric tonnes (1,966,978 2017/18), just over the 1,450,000 – 1,900,000 trade expectation. Current sales come to 1.116 billion bushels. That is 1% under the five year average and 10% under last year at this time.

Wheat export sales were reported at 347,764 tonnes during this week (all current crop). That was within the 250,000 – 450,000 trade expectation. USDA’s 975 million bushel wheat export hope is right on the five year average. Current sales as of the 26th total 570 million bushels.

Managed money funds were buyers of 8,000 corn contracts, 9,000 soybeans, 7,000 wheat, and 3,000 soymeal during yesterday's session. They were sellers of 1,000 soyoil.

Non-Farm Payrolls tops the list of important economic reports out today. Economists expect it to show an increase of 312,000, an increase over the September employment numbers that showed a 33,000 decline due to the hurricanes.

Cash cattle bids and asks are wide apart as feedlots are holding out for higher prices this week. It appears it will be late today before packers open their checkbooks.

Beef exports were 16,538 metric tonnes which was more than double the 7,330 tonnes posted last year for the same week. Beef export sales are now 11.6% over last year.

Cattle futures rolled over on Thursday after trading higher. Chartist are calling it a key outside day reversal. The first downside target would be the gap left on Monday.

Goldman roll will start on Tuesday which is where the index fund moves positions from the nearby December contract to a deferred contract. This activity goes on for 5 trading sessions and occurs in livestock and grain complex.

September 28 Quarterly Hogs and Pigs report suggested hog production should be running about 3.9% above a year ago. Allendale has added up hog slaughter from September through October 28 and hog slaughter was 3.6% over last year, in line with expectations.

Weekly pork export sales rebounded after 3 sluggish weeks of business. Sales came in at 25,795 tonnes which was 48% over last year during the same week. Year to date sales are 6.9% over last year.

February lean hog futures filled gap that was left earlier this week and closed in the upper half of trading range. Spreading and fund activity was a contributing factor for the volatility. Look for more choppy trade going into the close today.

Dressed beef values were mixed with choice up .86 and select down .55. The CME Feeder Index is 158.71. Pork cutout value is up 1.37.

Daylight Savings Time ends this Sunday, November 5th at 2:00 AM CT. Don't forget to set your clocks back one hour.

Technical Chart of the Day

If you have any questions on any of our content, give us a call at 800-262-7538 or service@allendale-inc.com


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